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Tech Wealth and Ideas Are Heading Into News

Producing serious news is an expensive enterprise with a beleaguered business model, one that remains tied to the tracks as a locomotive of splintered audiences and declining advertising hurtles toward it.

But just when it looked as if all were lost, an unlikely cavalry has come roaring over the hill with serious money, fresh ideas and no small amount of enthusiasm. Silicon Valley and its various power brokers — some who had roles in putting the news business in harm’s way to begin with — are suddenly investing significant sums of money in preserving news capacity and quality.

Pierre M. Omidyar, the founder of eBay, revealed last week that he would back the journalist Glenn Greenwald and his colleagues in a newly conceived news site to the tune of $250 million. Just over two months ago, Jeff Bezos, the founder of Amazon, spent the same amount to personally buy The Washington Post. That’s half a billion dollars dropped into serious news production, a sector that investors in distressed assets have been fleeing.

It doesn’t stop there. In July, Laurene Powell Jobs, widow of Steve Jobs, invested in Ozy Media, a news start-up, joining a group that includes the angel investor Ron Conway; Larry Sonsini, a lawyer from an eminent Silicon Valley law firm; Dan Rosensweig of Chegg.com; and David Drummond, Google’s chief legal officer.

Chris Hughes used his Facebook money to buy The New Republic and provide financial support to Upworthy, an aggregator of quality material. Next-generation news companies including Vice, Vox Media, BuzzFeed and Business Insider have all recently received significant investment. (In addition, Jeff Skoll, another eBay alum, backed Participant Media and now the TV channel Pivot, to make “socially relevant” films and television.)

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Pierre M. Omidyar, the founder of eBay, revealed last week that he would back a newly conceived news site.Credit
Tim Shaffer/Reuters

The list goes on, but the trend is clear: quality news has become, if not sexy, suddenly attractive to smart digital money. It makes sense once you step back. For all its excesses, Silicon Valley has not been a place where ostentation creates social capital. While any tech reporter will tell you that the valley is far from media-friendly, the people in leadership there are close, ferocious consumers of news and have strong opinions about its current shortcomings. And it would be a mistake to view the recent moves by some of the most important people in technology as a lark.

“Technologists have a view, perhaps inflated, that they can make the world better,” Mr. Omidyar said in an interview over the weekend. “There may be limits to doing it only through technology, or perhaps you get tired of doing it only through technology. So getting into content and broad communication is appealing.”

It would also be a mistake to believe that the only thing digitally enriched players bring is money. The investment of intellectual capital will be just as important. If ever an industry was in need of innovation — of big ideas from uncommon thinkers — it is the news business.

“I think that technology could help find a way to actually do important journalism for our democracy that can impact many more people and help serve it to a general-interest audience in a way that can be commercially sustainable,” Mr. Omidyar said. (A separate article has more excerpts from the interview with Mr. Omidyar.)

Smaller companies have created news sites that point a way forward but cannot begin to fill the loss of journalistic capacity that accompanied the great shakeout in the industry. For a time, it seemed as if newspapers, where much of journalism’s horsepower is stored, would either be strip-mined or become a plaything.

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Jeff Bezos, the founder of Amazon, bought The Washington Post.Credit
Matthew Ryan Williams for The New York Times

“People have been speculating that newspapers would become nothing more than trophies for rich businesspeople at the end of their careers,” said Michael Zimbalist, vice president for research and development at The New York Times. “But now successful midcareer entrepreneurs are investing and willing to play the long game. They have been disrupters themselves and won’t be bringing the same assumptions to the table.”

A profound reset is under way. In more than a decade of covering the news end of the media business, I cannot think of a time of greater optimism or potential. Nontraditional operators like Mr. Bezos can afford to adopt a long-term strategy, something he has done rather effectively at Amazon. And the barriers to entry for ventures like Mr. Omidyar’s start-up have evaporated: cheap digital tools enable production and collaboration, while social media like Twitter and Facebook enable the spread of content through sharing.

Technology and journalism, former antagonists, are about to give bromance a try, with Mr. Bezos and Mr. Omidyar leading the way.

Both men have upended and reinvented entire legacy categories. EBay created a community out of private buyers and sellers, while Amazon found gold among stacks of books with a seemingly infinite catalog, one-click buying and later, all manner of consumer goods. (Amazon also knows a little about last-mile delivery, so plopping a newspaper on the doorstep never had it so good.)

Kenneth Lerer, who is a partner at Lerer Ventures and has backed online sites like BuzzFeed and The Huffington Post, says Mr. Omidyar’s enterprise, which does not even have a name yet, has a leg up.

“The freedom to start a digital concern without legacy baggage is an enormous opportunity, much easier than trying to pivot a traditional news organization,” he said, adding that in both instances digital innovation would be in the front seat. “You cannot launch a successful modern media company without technology as an equal partner.”

It does not take an M.B.A. to understand that the ability to capture consumers’ attention and move them around a platform, all the while extracting value, might come in handy in the media business. ITunes used cheap, uniformly priced content to animate the sales of devices like the iPod; Amazon used cheap devices like the Kindle to push lucrative content sales. EBay reduced the friction and suspicion between buyers and sellers of all kinds of goods.

Reverse-engineering those skills into the production of news could have a big impact, as publishing companies turn toward consumers for revenue, pivoting from passive delivery of news to a deeper relationship with customers.

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The willingness to answer bedeviling old questions in new ways does not ensure success, but it creates remarkable possibilities. “Both Jeff Bezos and Pierre Omidyar have a hacker’s ethos, a willingness to engage in lateral thinking to solve problems in a nonconventional way, to reject what has been taken for granted and MacGyver their way to solutions,” suggested Shane Snow, a founder of Contently, a marketplace for content creators.

Consider Amazon’s ability to lead consumers through a highly personalized array of choices.

“If you have a story that is read by a million people, that’s great, but how do you get those million people to read another story?” said Henry Blodget of Business Insider. “Amazon is extraordinary at customizing its site for every visitor. They do endless testing and understand stickiness and relevance in a way few media companies do.”

One of the secrets of Amazon (and Netflix) is that it never offered one site, but millions of customized sites. It is not hard to envision a carefully measured invitation at the bottom of a highly trafficked news article: “People who read this story are also reading ...”

This unfolding partnership will be fun to behold. For all their differences, the news and technology businesses share a kind of utopianism, an idealistic belief that the work of human hands can make life better for other humans.

E-mail: carr@nytimes.com;

Twitter: @carr2n

A version of this article appears in print on October 21, 2013, on Page B1 of the New York edition with the headline: Tech Wealth And Ideas Are Heading Into News. Order Reprints|Today's Paper|Subscribe